The invention relates to preparation of electronic financial documents such as electronic tax returns. Tax preparation programs have become very popular and allow a user, such as an individual, taxpayer, accountant, or tax professional, to prepare and electronically file a tax return using a computer. Known tax preparation programs present a list of tax-related questions or data entry fields to the user as a series of interview screens or fillable forms, in response to which the user enters the appropriate data or answers. For example, in an individual tax return, certain interview screens or questions may involve personal and family matters such as name, address, social security number, marital status, number of dependents, etc. Other interview screens and questions may involve financial matters such as wages, retirement plan contributions, and social security, state and federal taxes paid or withheld as provided in Form-W2, charitable contributions, mortgage interest paid, property tax paid, etc. The electronic tax return may also be a business or corporate return with business related income and expense items. After entry of the data, the tax preparation application prepares an electronic tax return, which is formatted as necessary and electronically filed with a tax authority such as the Internal Revenue Service (IRS), state tax authority, or other tax collecting entity.
While tax preparation programs have been used effectively in the past to prepare and file tax returns, their effectiveness relies in part upon data input into the electronic tax return. The data, whether entered manually or imported from another program or file, may be as accurate as its source and may be inaccurate for various reasons. For example, it is not uncommon for manually entered data to be wrong for various reasons including human error, defective keyboards and issues with programs and files. Human error may involve typographical errors such as pressing the wrong number, pressing a number one too many or one to few times, pressing two keys inadvertently, inserting a comma in the wrong place, inserting a decimal point in the wrong place, or simply entering correctly typed data in the wrong field. Similar errors may be caused by computer components such as a defective keyboard that has an inoperable or sticky key and programs or files that do not operate as intended or that have corrupted data. Similar issues may arise with data that is imported from another program or file. There may also be cases in which there that tax preparation program generates errors while importing data from another program or file.
These errors, however generated, can have significant impacts on the result generated by the tax preparation program. For example, rather than an income of $75,000, a typographical error may result in an income of $750,000, which would involve substantially more tax owed. Similar results can occur with other types of errors. While this example involves a 10× increase in income and may be identified by the preparer due to its magnitude, others errors may be more subtle and more difficult to identify while still having a significant impact on the end result, particularly if there are multiple errors. Thus, it can be difficult to pinpoint the sources of the error within an electronic tax return.
For example, an individual may be entitled to a tax deduction for a retirement plan contribution in the amount of $5000 but the individual (or another preparer such as the individual's accountant or tax professional) may inadvertently type in $500 instead or the retirement plan contribution data may be wrong for other reasons. While this error is also an 10× error, the fact that there is an error may not be readily apparent to the preparer since the reduction in taxes due to the lower amount entered may not signal to the preparer that there was an error. Thus, this error may go unnoticed, thereby resulting in a loss of a $4,500 tax deduction and more taxes paid. This not only results in loss of a potential deduction to reduce taxes, but it may also increase the risk and consequences of an audit if data of the tax return does not match data sent to the tax authority, e.g., if data of Form W-2 that includes retirement plan contribution data does not match the retirement plan contribution data of the tax return, thereby triggering further review or an audit by the tax authority.
Known tax preparation programs such as TurboTax® (available from Intuit Inc.) and other tax preparation programs conduct a final review (examples of final review screens illustrated in FIGS. 13A-C) to check for errors in a completed tax return and to assess the risk of an audit (example of audit screen shown in FIG. 13D) by a tax authority. The final review and audit check, however, are based upon tax return data entered. For example a tax preparation program such as TurboTax® may perform a final review to check for formalities such as empty fields that should be populated with data or boxes that need to be checked to ensure that no available deductions or credits were missed (e.g., if the preparer did not review certain interview screens or fill out certain sections of the tax return). Thus, while the calculations performed on the tax data may be accurate, the tax return is only as accurate as the data entered, and the tax preparation program does not analyze the data itself which is instead accepted as accurate and utilized in calculations. Consequently, the amount of tax due or the refund calculated by the tax preparation program will be based upon incorrect data if incorrect data is entered. Further, a tax preparation program such as TurboTax® may perform an audit risk assessment and generate a visual indication of audit risk as low, medium or high in the form of a bar graph. This analysis and the resulting visual representation, however, are also based upon data entered.